Microsoft's Silverlight technology and rival Adobe's Flash format are currently locked in a race over who delivers the world's online video, but the ultimate prize may be who powers the next generation of Web software. Using Silverlight, the NBC site for the Olympics offered a glimpse of what is possible with future Web applications because viewers are able to watch up to four videos at once or follow the action with an online commentary that runs alongside the video.

ADOBE VS. MICROSOFT

Gartner analyst Ray Valdes said 90 percent of the top global 1,000 companies have yet to deploy any sort of RIA, while 90 percent of the top 100 consumer Web sites have already done so using the nonproprietary and more simple AJAX format.

That opportunity has Microsoft eyeing current leader Adobe for business that extends beyond Silverlight and into the sale of design tools along with server and database software to enable these new applications.

"We have a large and established customer base. There is no doubt in our minds that Microsoft is going after this space very aggressively, but we feel very strong and confident," said Jennifer Taylor, director of Flash product development.

Historically, Adobe's developer tools have focused mainly on design and creating for the Web. Now, it plans to extend that to more traditional software development with Flex, a system to help developers create and deploy applications.

Adobe plans to take the next step with tools called Adobe Integrated Runtime (AIR), which allow programs to run on the Web or offline on a computer's desktop.

On the other hand, Microsoft is approaching Silverlight from the opposite direction. It plans to take advantage of its legions of outside developers experienced in writing for its ubiquitous Windows operating system.

The next version of Silverlight, being tested now and due later this year, will support Microsoft's .NET framework -- tools used by developers to create desktop applications that work on Windows.

"This is a logical extension of the investment that we've had in the development space for decades," said Brian Goldfarb, group product manager for Microsoft's developer division.

Microsoft introduced its first version of Silverlight a year ago, but Gartner's Valdes said the second version is the first real form of Silverlight since the inclusion of .NET support turns the technology into "very different animal."